Heard of the “Family-Friendly Workplace Task Force”? If not, don’t blame yourself. The entity, created by a House Memorial in 2015, is a bit of a phantom. The Foundation had forgotten all about it until we spotted a very odd, no-byline article in the Clovis News Journal a few days ago. Apparently, the task force held a meeting at the North Annex of the Clovis-Carver Public Library — the first in “a 10-city tour around the state to gauge the interest and ability for a statewide paid leave policy.”

The memorial that created the Family-Friendly Workplace Task Force charged it with crafting recommendations for “the establishment of a parental paid-leave program to provide paid leave to parents for childbirth and to care for newborn or newly adopted children or for newly acquired foster children” and naming “a state agency to manage the parental paid-leave program and the parenting workers’ leave fund.”

The executive director of the far-left Southwest Women’s Law Center was “requested to serve as chair of the parental paid-leave working group,” and the establishment-left Bureau of Business and Economic Research, housed at UNM, was to “convene” the group.

But dig around on the web for anything regarding the Family-Friendly Workplace Task Force, and you’ll find zilch. The BBER doesn’t offer any information on its website. (We’ve contacted them to inquire further.) Neither does the Southwest Women’s Law Center’s online presence. News coverage, except for the Clovis News Journal article, has been nonexistent.

So what’s going on? Don’t citizens, taxpayers, and businesses deserve to know what the Family-Friendly Workplace Task Force has been up to? And where is the list of the nine cities remaining in the group’s statewide tour?

The deadline for the task force’s “findings and recommendations” is October 1st — just three and a half months from now. The Foundation will stay on the case, and report what we find.

The state’s Department of Cultural Affairs (DCA) is planning to “cut its operating budget by eliminating the jobs of six of the seven managers who oversee historic sites across New Mexico.” In addition, admission fees are slated to rise, and “the number of days some of its sites are open” will be reduced.

The department’s budget for the impending fiscal year has been clipped by $2 million, and not surprisingly, the downsizing has elicited plenty of apocalyptic reactions. (The Fort Stanton site manager called it “a terrible, inequitable solution.”) But DCA’s smart bureaucrats will see less funding as a way to get their house in order, and address longstanding problems.

According to the Legislative Finance Committee, the department faces “key, ongoing challenges for its Museums and Historic Sites Program, which makes up 59 percent of the agency’s budget. The first is maintaining facilities, many of which have significant deferred maintenance issues, creating safety hazards and exposing art and historical structures of significant cultural value to risk of damage or destruction.” In addition, many exhibits “are left in place for years without updates, reducing interest in repeat visits. For example, the Museum of Indian Arts and Culture … has two key exhibits that have received essentially no updates in the nearly 20 years since their installation. Similarly, Fort Sumner was built with plans to have an exhibition wing, but it took years to build a permanent exhibit space, and that space remains empty.”

Worst of all, perhaps, is legislative auditors finding that DCA “owns 191 buildings across the state … and has no facility master plan or structured method to prioritize funding.”

So the department’s got issues, bigtime. A thorough right-sizing — one that includes unloading low-priority properties — would appear to be in order. One promising approach is a greatly expanded role for the Museum of New Mexico Foundation, which “provided $3.2 million in financial assistance in FY14 and $3 million in FY15.”

“U.S. crude,” The Wall Street Journal reports, “closed above $50 a barrel for a second day in a row on Wednesday and is up around 95% from its decade-lows reached earlier this year.”

Daniel Yergin, vice chairman of consulting firm IHS, recently told the Journal that the “big news in demand is growth in India, which now rivals China. India really is seen as the growth market for oil.”

BP’s annual energy outlook is predicting a global petroleum-demand increase of 20 million barrels per day by 2035, driven by “use in Asia for both transport and industry.”

It’s all good news for New Mexico, which ranks sixth among the states in oil production. Drilling in the Land of Enchantment hit bottom in 2007, but the fracking revolution has helped to more than double output since then.

Low prices during the last year and a half have induced layoffs, as well as a slight production decline that started in May 2015. But for the moment, the future looks bright. Prices have recovered. (Maybe they’ll even rise further.) The ban on oil exports has been lifted. And the oil industry has yet to tap the massive Mancos play in the northwestern part of the state.

With petroleum providing so much direct and indirect employment in New Mexico, as well as contributing about a third of the tax revenue generated here, it’s more important than ever to fight the eco-left’s anti-fracking hysteria and “keep it in the ground” nonsense. Sorry, “greens,” but oil is a huge part of our economy, and the latest indications are that it will be for a long, long time to come.

How is New Mexico’s economy doing? We at the Rio Grande Foundation use and report on this information often because these reports provide a good deal of information on how New Mexico is faring relative to other states. Since the Legislature makes the laws, it is their responsibility to enact policies that create the conditions

You may have seen media reports of a recent report by WalletHub (which was picked up by several media outlets) stating that New Mexico has the 5th-worst economy in the nation. This is in-line with many other reports which place New Mexico’s economic performance towards the bottom among US states (as seen on the map below), so it does have credibility.

But in looking through the report, I realized that it used some questionable variables to come to its conclusions. For example, median household income sounds like a great statistic, but high income areas are often very high cost areas. In fact, people in “poorer” states often have more disposable income after taxes and basic expenses than those in “rich” states.

The study also focuses on high tech jobs with several of its variables. There’s no doubt that tech is “cool” with a lot of well-paid workers, but it is hard to understand why three separate variables (% jobs in tech, patents, and venture capital, much of which is tech-related, albeit by no means all) should, be factored into a report measuring the overall economic health of a state. After all, there are other important industries with lots of good-paying jobs. Does it matter if those jobs are in the high-tech field or not?

While the overall rankings are questionable, California’s 3rd-place ranking alone is reason enough to question the report. This is the same State, after all, that is seeing high levels of domestic out-migration as seen below and the highest rate of real poverty among US states. Placing California 3rd-best in overall economic health just doesn’t make sense.

Contrary to Winthrop Quigley’s obvious frustration over New Mexico’s poor performance on these economic rankings, they can be extremely useful for policymakers and the public in understanding where changes and improvements must be made. Unfortunately, this Wallethub report leaves much to be desired in that regard.

The business owners suffering from the Albuquerque Bernalillo County Water Utility Authority’s movement of water pipes along Central Avenue, in preparation for “Albuquerque Rapid Transit,” probably don’t read The Boston Globe.

Lucky them.

A few weeks ago, Larry Summers, president emeritus of Harvard University, penned an op-ed with MBA-MPP student Rachel Lipson. They described the sorry saga of the Anderson Memorial Bridge, which links Boston to Harvard Square: “Rehabilitation of the 232-foot bridge began in 2012, at an estimated cost of about $20 million; four years later, there is no end date in sight and the cost of the project is mushrooming, to $26.5 million at last count.”

“Infrastructure!” is the rallying cry for left-leaning scholars and activists who claim to understand the best ingredients for economic development. Reliably ignored, in their advocacy for bridges, tunnels, parks, bike paths, “mass transit,” and “affordable housing,” is the ugly reality that government at all levels increasingly demonstrates a woeful inability to complete projects on time and on budget.

Summers and Lipson lament “bureaucratic ineptitude and the promiscuous distribution of the power to hold things up” and “the failure of leadership to insist on reasonable accountability to meet reasonable deadlines.” More and more voices are joining the chorus of critics. Harry W. Jones, of NASA’s Ames Research Center, has decried project-planning that reflects “optimism and hope for success in a supposedly unique new effort rather than rational expectations based on historical data.” For an eye-opening exploration of this problem, listen to economist Russ Roberts’s interview with Oxford University’s Bent Flyvbjerg.

Moving water pipes is just one task on the construction to-do list for ART. (As KRQE noted last month, the revenue “the Water Authority is spending on relocating water lines for the bus lanes and stations and now rebuilding medians [is] separate from the $119 million the ART project will cost.”) As the city presses ahead with the project — despite massive public opposition and two lawsuits — look for expenditures to increase and deadlines to lapse.

The Sooner State is wrestling with the same downturn in the oil patch that plagues New Mexico. But despite a strong attempt to close its massive deficit for fiscal year 2017 with big tax hikes, legislators have reached a deal that cuts spending and does not hike the state’s major revenue-raising mechanisms.

As summarized by the Tax Foundation, the fiscal compromise eliminates the refunability of the earned income tax credit, ends a “double deduction” to the state income tax, caps the total credit available for low-producing oil wells, and puts a cap on the “Investment and New Jobs Tax Credit.”

Jonathan Small, the president of the Oklahoma Council of Public Affairs, is pleased that the deal “cuts one area that, while important, is also rife with waste and abuse — higher education. Many legislators deserve credit for forcing administrators (some are former politicians) at state colleges and universities to tighten their belts and refocus on the critical core mission of educating students. Hopefully, future legislators and governors will take the same attentive eye to the rest of Oklahoma government.”

The start of fiscal 2017 is less than a month away, and it’s quite clear that there won’t be enough revenue to cover the spending plan New Mexico legislators adopted earlier this year. A special session charged with closing the deficit is all but certain. Let’s hope that Santa Fe makes the right call, and focuses on expenditure control, not tax hikes. New Mexico’s economy has not yet clawed its way back from the Great Recession, and some are warning that another national downturn is likely. The Land of Enchantment’s workers, families, and taxpayers are in no position to bear the burden of “revenue enhancement.”

On this Saturday’s episode of Tipping Point New Mexico, Dowd Muska and Paul Gessing interviewed Greg LeRoy of Good Jobs First on a variety of issues relating to developing New Mexico’s struggling economy. This interview represents the very best of left/right agreement in opposing government policies that pick and choose some special interests and industries over others.

While there are disagreements between left and right over what ideal economic policies look like and what exactly a “subsidy” is as opposed to a targeted tax break, but overall Good Jobs First is a trove of useful information. For example, you can see here which companies have received the most subsidies.  The report lists Intel as the top recipient — a conclusion we might disagree with based on differences on tax exemptions as opposed to direct subsidies (like payouts to the film industry).

Nonetheless, three of New Mexico’s top subsidy recipients are in the film industry (Lions Gate, Sony, and Comcast). Interestingly, Eclipse Aviation and Schott Solar are on the list and have both gone out of business. Lastly, Forest City Enterprises is number two on the list because it developed Mesa del Sol and received massive TIDD subsidies. This is an ongoing issue as Santolina has asked for massive TIDD subsidies from the Bernalillo County Commission as well.

Anyway, the interview is fun and informational. It’s just the sort of principled, non-partisan work we are proud of at RGF.

You can check out the hour-long interview below:

The Foundation is tracking announcements of expansions, relocations, and greenfield investments published on Area Development‘s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.” In an explanation to the Foundation, its editor wrote that items for Area Development‘s announcements listing are “culled from RSS feeds and press releases that are emailed to us from various sources, including economic development organizations, PR agencies, businesses, etc. We usually highlight ones that represent large numbers of new jobs and/or investment in industrial projects.”

In May, of 11,357 projected jobs, 9,719 — 85.6 percent — were slated for right-to-work (RTW) states:

As is usually the case, no projects are to be located in New Mexico.

Nineteen domestic companies based in non-RTW states announced investments in RTW states. Just one announcement went the other way.

RTW prevailed in foreign direct investment, too. Six projects are headed to RTW states, with one to occur in non-RTW states.

New Mexico’s RTW neighbors to the east and west landed marquee investments. Caterpillar picked Arizona for its “new surface mining and technology operations,” which will create “more than 600 projected … jobs over five years, with employees in executive management, engineering, product development and support positions.” Italy-based SATA, “a high-tech components manufacturer,” selected Texas for a $114 million, 300-job “machining operation.” The Lone Star State also saw Hong Kong-based Lollicup commence operations at a 200-employee plant for “foodservice packaging products and … beverage ingredients.”

Outside of the Southwest, UTC Aerospace Systems — which is ending its Albuquerque presence — added 260 workers to its facility in Foley, Alabama. And Sparta Industries is slated to created 1,000 jobs in Georgia, to manufacture “foam insulation for use in the commercial building industry.”

Methodological specifics:

* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.

* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases from additional sources.

* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.

* Intrastate relocations were not counted, interstate relocations were.

It’s no secret that New Mexico’s Sen. Tom Udall is among the most favored elected officials of professional environmental groups.  It was, however,  somewhat surprising (and gratifying) to see him in a recent presentation in Albuquerque not support a national ban on “fracking” saying it “should remain on the state level.” In the same presentation he stated that New York’s “fracking” ban “is not based on reality.”

This is good news and it flies in the face of opposition to “fracking” by Bernie Sanders and Clinton’s nuanced position on the issue. There is also a long list of national and New Mexico environmental organizations that would like to ban fracking. Of course, New Mexico is a major oil and gas producing state and banning fracking would destroy our economy and Udall has to know that, but it is good to see him embrace reality on the issue by recognizing that it should be a state, not federal, issue.

Udall also noted the obvious fact that “New Mexico doesn’t have a strong enough private sector.” This is news to no one, but Udall’s sad “solution” isn’t “right to work” which he opposes, it is more “tech transfer” from the Labs and more infrastructure spending. He also supports increasing the job-killing minimum wage. As I stated in response to Rep. Lujan-Grisham’s similar point, tech transfer from the Labs has been tried before. Obama’s “stimulus” was also supposed to improve infrastructure with little success.

In 1999, New Mexico enacted a law that allowed receipts “from selling uranium hexafluoride and from providing the service of enriching uranium” to be deducted from the gross-receipts tax.

Was the perk a wise “public investment” in “economic development”? The truth is, we don’t know. Counterfactuals are tough. Perhaps URENCO, the European uranium-enrichment company that benefited from the break, would have come to New Mexico without it — site-selection decisions are complicated. But in 2016, whatever its past “benefits,” the deduction is looking iffier and iffier.

Case in point: Exelon. On Thursday, the utility announced plans to close two of its nuclear plants. According to the Chicago Tribune, the “company, the parent of … utilities provider ComEd, said the Clinton Power Station would close June 1, 2017, and the Quad Cities Generating Station in Cordova would close June 1, 2018. The plants have lost a combined $800 million in the past seven years.”

Love them or hate them, nuclear plants are closing in the U.S. And the much-touted renaissance of domestic atomic power, predicted by many a decade ago, is fizzling. In URENCO’s 2015 annual report, the company disclosed that in North America, “historically low prices of fuel used for electricity generation, for example natural gas, combined with a decline or minimal growth in electricity demand continue to challenge the economics of both existing and proposed nuclear power projects.”

Enrichment customers can be found all over the world, of course, but for how much longer? Europe is denuclearizing. Sweden is speeding up the closing of its two reactors, from 2020 to 2018. Germany is planning to be fission-free by 2022. The developing world offers an opportunity, but China is ramping up its own enrichment capabilities, and globally, URENCO faces fierce competition from Russia.

In 1999, were the elected officials who approved URENCO’s GRT deduction “visionary”? It’s getting tougher and tougher to believe so. The freebie is another example of legislators and governors lacking the ability to predict which businesses and industries pose the greatest opportunities to build a vibrant private sector here.

New Mexico doesn’t need economic-development trickery. (And the kinda-sorta corruption that comes with it.) It needs to focus on the basics — low and simple taxes, reasonable regulations, appropriate infrastructure, meaningful school reforms — to turn around a state in dire need of job and wage growth.

The left-leaning Brookings Institution’s new paper “One Third of a Nation: Strategies for Helping Working Families” will be tough reading for many in the welfare-industrial complex.

Authors Isabel V. Sawhill, Edward Rodrigue , and Nathan Joo examined “the poorest one-third of all families in the U.S. with an able-bodied head between the ages of 25 and 54.” The households “are disproportionately minority, poorly educated, and headed by single parents.”

What explains the condition of the people in the bottom third? The Brookings scholars call it the “work gap” — the reality that “many are not employed at all, or work limited hours.”

The “biggest impact on the economic well-being of these households is achieved by simply assuming that they work full time.” Low-income families would enjoy “large earnings gains …. if more jobs were available and … household heads were willing and able to work full time at their existing or predicted wage.”

In New Mexico, the employment-to-population ratio, “which measures the share of people in their prime working years who have jobs,” plummeted between 2007 and 2015. It fell from 79.1 percent to 71.9 — far and away the largest drop in the nation. (Only Kentucky and West Virginia posted a lower overall share.)

What New Mexico needs, more than anything, is more and better jobs. Anyone interested in implementing policies sure to generate sustainable, vibrant economic development?

The cutting’s about to begin.

The Albuquerque Journal reports that the Department of Health and Department of Cultural Affairs “will be among the agencies hit hardest by budget cuts that take effect next month.”

“If we had our choice, we would not be doing this,” harrumphed a Department of Health spokesman, whining about cutting 6 percent in contract costs, due to “the loss of about $12.5 million in state funding in the coming year, from $304.4 million to $292.9 million.”

The Department of Cultural Affairs is planning to lay off 11 employees, and will “leave vacant staff positions open, freeze noncritical contracts and trim the schedules of at least some museums and historic sites.”

But bureaucrats’ grumbling aside, it’s worth noting that New Mexico is, unquestionably, the biggest-spending state in the Southwest. Here’s a graph of per capita spending, in 2013, for the region’s six states:

The expenditure data are from the U.S. Census Bureau’s Annual Survey of State Government Finances. They include every penny the states spent — on schools, highways, prisons, Medicaid, food stamps, subsidized housing, corporate welfare, debt service, quasi-government entities, etc. (Beware New Mexico’s “general fund” figure, which excludes many categories of spending, as well as the revenues received from the federal treasury.)

With the Land of Enchantment’s economy stuck in neutral, and the future of oil-and-gas production anyone’s guess, it’s all but certain that more austerity lies ahead. The Foundation looks forward to weighing in on what additional cuts need to be made to the fiscal 2017 budget.

The Pew Center does a great deal of solid work to educate the public on various state economic issues. The two images below detail New Mexico’s unfunded retirement costs as of 2013. As the first chart shows, New Mexico’s unfunded burden is the 6th-heaviest in the nation among US states. No neighboring state comes close to having New Mexico’s burden levels which further makes us uncompetitive with our neighbors.

As the following chart shows, New Mexico’s unfunded pension costs rose quite quickly as a share of personal income in the wake of the financial downturn of 2008. It went down slightly between 2012 and 2013, but more needs to be done to make our pension system sustainable (the best and most sustainable option is to move to a defined contribution 401-K style system as opposed to the current defined-benefit system which puts workers’ retirement in the hands of government officials and puts taxpayers on the hook for future benefits.  The full Pew report and charts can be found here.

The news is bad, and it just keeps getting worse.

According to the University of Virginia’s Demographics Research Group, New Mexico is slated to lose 6.3 percent of its working-age population between 2010 and 2040.

That’s pretty awful, but the picture looks horrific when one examines our neighbors. In Texas, the working-age population is predicted to grow by 50.7 percent. Colorado (47.0 percent), Utah (41.6 percent), Arizona (33.0 percent), and Oklahoma (16.3 percent) are estimated to grow, too. Pew Center has an article on the issue here.

Fabulous weather, friendly people, low costs, and rich history/culture/cuisine. Yet our present is shaky, and our future is downright terrifying. Something is very, very wrong with the Land of Enchantment. Unless policy changes are made, rapidly, its fate will mirror the deeply distressed states of the Northeast — not our dynamic, vibrant, and pro-growth neighbors.

Kudos to Albuquerque Business First for listing “10 of the most unusual exemptions” to the state’s gross receipts tax (GRT). Fuel for small planes, website hosting, commission for travel agents — it’s curious, what economic activities legislators choose to award with special treatment.

But the Foundation has its own list of bizarre GRT perks. We’d add a few to ABF’s list. Deductions are applied to receipts from:

* professional boxing, wrestling, and martial arts contests

* leases on manufactured homes (but only for durations of longer than one month)

* research, development, testing, and evaluation services for the U.S. Air Force’s troubled Operationally Responsive Space Program

* sales by “a qualified contractor” of “directed energy and satellite-related inputs”

* the sale and installation of solar-energy systems (of course)

* the sale of uranium hexafluoride from enriching uranium

The GRT is a messy monstrosity, and it needs serious simplification — and reduction. But as long as legislators and governors seek votes for their support for “creating jobs,” the GRT code will remain riddled with exemptions and deductions of dubious justification.

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// ]]>The following article by RGF president Paul Gessing was written in response to an article that appeared a few days ago (linked below) which attacked former New Mexico Gov. Gary Johnson’s fiscal record in New Mexico. As the free market think tank working in New Mexico, we at the Rio Grande Foundation felt it was worth clearing the air and explaining the pluses (and minuses) of Gary’s time as New Mexico’s top executive.

//

James Spiller recently wrote a scathing article in which he argues that the record of former New Mexico governor and current Libertarian candidate for president Gary Johnson is “not conservative and not even all that libertarian.”

As the head of New Mexico’s free-market think tank (although I was in Washington, not New Mexico, during the Johnson administration,) I’d like to offer my own thoughts on Johnson’s tenure. I’d also like to refute some of what Mr. Spiller has to say in his critique.

Spiller starts by attacking Johnson’s fiscal record, claiming that he is a “big spender” compared with successors Richardson (a Democrat) and Martinez (a Republican). One problem is that Spiller “credits” Johnson with spending money he had little control over. His spending numbers include federal dollars that flow into the state for everything from Medicaid to education. Including just the General Fund that the legislature and governor must agree to each year, Johnson’s first budget was $2.7 billion and his final budget, eight years later, was $3.9 billion (an increase of about 41 percent).

 

Thus, under Johnson, New Mexico’s General Fund spending grew by 4.67 percent annually, not the outrageous 7.29 percent rate cited by Spiller. Once you factor in inflation and New Mexico being a relatively fast-growing Western state (population growth in the Land of Enchantment has stagnated since the late 2000’s economic crisis), Johnson’s spending record looks much better.

As a self-identifying libertarian, I still find that growth too fast, but there is no doubt that Governor Johnson has more fully embraced his Libertarian viewpoint since leaving office in 2003.

Of course, annual budget growth is only part of any governor’s fiscal record. Spiller accurately notes that Bill Richardson, a Democrat who immediately followed Johnson, grew government at a slower rate during his eight years in office. Make no mistake about it, Richardson was no fiscal conservative. During Richardson’s first six years in office, General Fund spending grew by more than 6.5 percent annually.

But, Richardson’s big-spending dreams were dashed by the 2008 economic crisis which saw state spending decline by an average of 8.51 percent over two years. The money simply wasn’t there. Worse, Richardson foisted two massive boondoggles upon New Mexico taxpayers: a $225 million spaceport built for Virgin Galactic that sits largely unused in the desert and a commuter train that sucks $50 million annually out of taxpayers’ wallets.

To his credit, Johnson didn’t foist any costly boondoggles upon his successor or future taxpayers. In fact, New Mexico’s budget was sufficiently strong that Richardson was able to enact major pro-growth tax cuts immediately upon taking office. Johnson too pushed tax cuts while in office, but Richardson was able to follow through, taking the state’s top income-tax rate from 8.2 to 4.9 percent.

Richardson succeeded where Johnson failed in cutting taxes in large part because during Johnson’s tenure the New Mexico legislature was controlled entirely by Democrats. These were no razor-thin margins either: Democrats held approximately 60 percent of all legislative seats.

With so many Democrats in the legislature, Johnson’s main impact was in vetoing an astonishing 739 bills over his eight years in office.

Nonetheless, Johnson’s agenda was stymied in other ways by the partisan makeup of his state’s legislature. Every year Johnson proposed school-choice vouchers and every year the Democrats in the legislature killed them.

Though he struggled to achieve major free-market reforms during his tenure, Johnson did get the legislature to approve the use of private companies to build and run new prisons. These prisons ran at a much lower cost than the government-run prisons even when amortizing the initial construction costs. This helped to end prison overcrowding in New Mexico.

One point that Spiller is correct on is New Mexico’s film-subsidy program. The Rio Grande Foundation has consistently opposed this subsidy which Richardson expanded from 15 to 25 percent. For every $1,000 a Hollywood film spends in New Mexico they get a $250 check from New Mexico taxpayers. In 2012 Representative Justin Amash of Michigan rightly challenged Johnson on this supposed “success” on social media calling film subsidies “central planning and cronyism.”

Is Gary Johnson’s spending record perfect? No, but perfect is not on the ballot this year. He’s running as a fiscal conservative against two candidates who eagerly support bigger government across the board. In most any presidential election you could do much worse than New Mexico’s former Governor. That is especially so this year.

— Paul Gessing is the president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom, and individual responsibility.

Kudos to New Mexico Attorney General Hector Balderas for suing the Environmental Protection Agency in the wake of the Gold King mining spill.  This disaster was clearly caused by the EPA and its incompetence.

Unfortunately, on another issue, the “Clean Power Plan,” Balderas has turned against New Mexicans’ best interests. The following map from America’s Energy Alliance (you can go there and find an interactive version of the map) shows which states are going along with Obama’s unconstitutional power-grab to regulate utilities (which should be regulated by the individual states). As is usually the case, New Mexico has aligned itself more closely with California and other leftist-dominated coastal cities than its more economically-free and fast-growing neighbors.

According to calculations from America’s Energy Alliance, New Mexicans will see wholesale rates rise by 10% and retail rates go up by 14% if the Clean Power Plan is implemented. The plan is so “over the top” that the US Supreme Court halted its implementation. The Rio Grande Foundation has joined those suing to stop the Plan.

Lest you think Obama’s “Plan” will have a major impact on the environment, EPA administrator Gina McCarthy testified that the rule would have a ‘minimal’ impact on climate.

Southwest Cheese Company, “one of the largest and most successful cheese and whey protein manufacturers in the world,” set up shop in Clovis a decade ago. It’s expanded operations twice, and is planning to do so again.

Great news, right? Well, yes and no.

Last week the Clovis News Journal reported that city commissioners “passed a measure clearing the way for a $350,000 grant to help fund the third phase of the Southwest Cheese plant expansion effort.” The money is funded through the Local Economic Development Act (LEDA), which the state claims “allows public support of economic development to foster, promote, and enhance local economic development efforts while continuing to protect against the unauthorized use of public money and other public resources. This empowers communities to embark on economic development projects tailored to their LOCAL needs.  In essence, LEDA is used to enter into a ‘public private partnership’ for an economic benefit.”

But LEDA’s “benefits” have been tough to verify. According to the Legislative Finance Committee, “the state does not receive sufficient reporting from businesses using tax incentives and [LEDA] funds to properly evaluate these programs. As a result, it is impossible to determine the relative effectiveness and cost-efficiency for these programs or to determine if they provide a positive or negative financial return for the state. It is also impossible to evaluate if these programs act as rewards for job creation that would have occurred absent the incentives. [The Economic Development Department] reported fewer jobs in FY15 than in FY14 despite spending about twice as much in LEDA funds.”

That’s public policy in New Mexico — revenue flows to programs and “incentives,” with rarely any analysis of return on “public investment.” Whether it’s lottery scholarships or preschool or “job creation,” taxpayers lack evidence that their dollars are wisely spent. Isn’t it time to do something about that?

The following letter ran in the Albuquerque Business Journal on May 23, 2016.

Resources like oil and natural gas are boons for smart policymakers. On their own, they have enormous potential to create jobs, profits, and positive effects on economies near oil drilling sites. These benefits are balanced by inevitable swings in oil prices which can result in well shutdowns and worker layoffs. Jerry Pacheco notes that these negative effects can extend outside of the petroleum industry, and affect state budgets.

The issue is not that resources are a “curse.” Rather, it’s all about how you manage them and diversify your economy. Texas and New Mexico, while neighbors, are very different. New Mexico lags behind Texas in ratings of poverty, GDP per capita, and income. In other words, New Mexico is poorer than Texas by several measures.

In large part, this contrast is driven by vast differences in public policy and business culture. Texas is a “right to work” state that taxes neither business nor personal incomes. It also has a very pro-business culture and has numerous major companies headquartered within its borders.

New Mexico, on the other hand, places high tax and regulatory burdens on businesses and has a culture that is suspicious of outsiders and for-profit enterprise. Outside of oil and gas, New Mexico tends to rely on government. Government efforts are often unresponsive to market demands, and based more on what sounds good to politicians than what actually makes financial sense. Spaceport America, a government project, now sits empty as taxpayers continue to provide for its upkeep.

Tristan Goodwin
Policy Analyst
Rio Grande Foundation

The media are reporting that New Mexicans can expect Blue Cross to return to New Mexico’s Obamacare exchange for 2017. That should be good news, but the fine print is more troubling.

According to Politico, (article is behind a paywall) “Blue Cross and Blue Shield of New Mexico might return to the state’s Obamacare exchange for 2017 – but it wants to raise average rates for individual plans by more than 80 percent over what it charged last year.

Two other carriers – New Mexico Health Connections and Presbyterian Health Plan – are seeking average increases of more than 30 percent next year for individual plans.”

So, before supporters of the disastrous ObamaCare law get too excited, they should realize just how much these plans are costing average New Mexicans. Blue Cross President Kurt Shipley put the best possible spin on the situation saying the 83 percent listed by the state doesn’t accurately reflect proposed rates because new plans will be offered and the premiums will be competitive with those of other insurers in the New Mexico market. In other words, since consumers are forced to purchase “Mercedes Benz” plans as opposed to Hyundai plans, prices will go up.

That is little consolation for those getting socked with 83 percent rate hikes….and it doesn’t explain why New Mexico Health Connections and Presbyterian plans are going up by more than 30 percent.

I guess there is always Medicaid!

Think revenue from oil-and-gas taxes is volatile? Take a look at the states that have targeted “millionaires” for sky-high levies on personal income.

In New Jersey, Governor Chris Christie is planning to close a $1 billion budget gap for the current and 2017 fiscal years. The red ink is the result, NJ Advance Media reported, of “lagging gross income tax collections from workers’ withholdings and from such non-earned income as capital gains, which together account for 40 percent of the state’s total revenue.”

The Garden State imposes an income-tax rate of 8.97 percent on both singles and married couples with annual earnings greater than $500,000. Such greedy government played a role in the decision of hedge-fund manager David Tepper to flee. Earlier this year, the Associated Press reported that

legislative budget forecaster Frank Haines cited the billionaire’s move to Florida as a potential factor in how much income tax revenue the state brings in. Income tax revenues make up the biggest share of cash in state coffers, and a shift in projections of as little as 1 percent amounts to about $100 million, forecasters say.

It’s unclear how much effect Tepper’s departure could have, because his tax returns haven’t been made public and it’s unknown how much taxes affected his move. Tepper didn’t return messages seeking comment.

But his move has caught the attention of the usually headline-shy legislative budget office.

“If a very wealthy individual — potentially a significant taxpayer to the state — relocates and relocates not only as we’ve been reading about it but really relocates for tax purposes … beyond our reach, then that’s something to be aware of,” said Haines, the legislative and budget finance officer.

Nearby, in Connecticut, “Thomas Peterffy, one of three Connecticut residents with an 11-figure net worth,” joined Tepper in Florida. “C. Dean Metropoulos, an investor and food industry executive who controls Hostess Brands, is also now a Palm Beach resident, according to Forbes.”

Even the left-ish Pew Research Center has concluded that “states are finding that taxing the incomes of the rich means living with unstable budgets.”

Policy has consequences. Politically popular “fixes” to fiscal woes often have unintended impacts. Something to remember the next time New Mexico’s liberals — taxpayer-funded and otherwise — call for higher taxes on “the rich” as a tool to address the Land of Enchantment’s mounting deficits. Hiking marginal income-tax rates makes the state less attractive for residents and relocators alike. But it also makes budgeting more difficult.

(Albuquerque) New Mexico could make significant improvements to its criminal justice system by embracing a common-law principle called mens rea.

A new Rio Grande Foundation paper describes in detail why the New Mexico Legislature should embrace the principle of “guilty conscience” in criminal justice. As described by Roscoe Pound, the dean of Harvard Law School from 1916 to 1936: “Historically, our substantive criminal law is based upon a theory of punishing the vicious will. It postulates a free agent confronted with a choice between doing right and doing wrong and choosing freely to do wrong.”

In the late 19th century, industrialization prompted the creation of regulatory authorities at the federal, state, and local levels. Over the decades, and continuing today, a myriad of rules came to govern “the environment around us, the food we eat, the drugs we take, health, transportation, and housing, among many others.”

One of the best examples of an egregious strict-liability prosecution at the federal level occurred in the Land of Enchantment. In 1996, Bobby Unser, a three-time winner of the Indianapolis 500, went snowmobiling with a friend near Chama. A flash snowstorm blew in, and whiteout conditions caused Unser and his companion to become trapped.

Severely ill and exhausted after two days and two nights, the men found a barn with a phone and called for help. But once Unser informed the US Forest Service of the incident, he was prosecuted for entering a “wilderness” area – even though there was no proof that such a violation took place. In 1997 he was convicted and fined by US District Judge Lewis Bacock. The conviction was appealed, but ultimately Unser’s prosecution was left to stand after the US Supreme Court refused to hear the case.

Unser’s case illustrates broader problems with the lack of a mens rea requirement. The New Mexico Legislature can take another step – as it did in 2015 with standard-setting civil asset forfeiture reforms – to reverse the tide of overcriminalization while continuing to protect those who are genuinely harmed by bad actors.

The full paper, “Accidental Criminals: Why New Mexico Needs Mens Rea Reform” is available here.

“We’re growing the health care safety net to help more people.”

That’s Human Services Department spokesman Kyler Nerison, boasting about how Medicaid expansion has pushed the share of New Mexico’s population without “health insurance” down to 10.2 percent.

Wait a second. Getting on a welfare program does mean one has “insurance.” And it’s not at all clear that, broadly speaking, Medicaid expansion means more “help” for New Mexicans. Access and quality problems are severe, and honest researchers have found verifiable positive outcomes from Medicaid enrollment tough to document.

So what’s going on here? New Mexico’s taxpayers are bearing the relentless burden of liberals’ obsession about “the uninsured.” For decades, the fact that some Americans lack health insurance garnered votes and power for Bernie Sanders-style populists. But for those willing to undertake the task, unpacking the data on the uninsured was revealing. Some were already eligible for Medicaid and/or other government programs. Some were illegal aliens. Some were young, healthy, and not at serious risk of an illness or injury. Furthermore, the duration of most uninsured periods was rather short. And charity and cash discounts helped the uninsured access care more than was commonly understood. No better evidence for this phenomenon existed than Oregon’s pre-Obamacare expansion of Medicaid. As Avik Roy noted, when a “lottery” was held to sign up new beneficiaries, “40 percent of those who ‘won’ … didn’t bother to sign up.”

Lack of insurance was a problem — not a crisis. And the solution was broad agenda of market-oriented reforms that would have dramatically lowered the cost of premiums, and this permitted more individuals and employers to purchase coverage.

Instead, we got Obamacare. Medicaid expansion, massive new mandates, and subsidized insurance through “exchanges.” It isn’t working. Then again, it couldn’t. A few months ago, the National Center for Policy Analysis’s John R. Graham wrote what is perhaps the best summary of the “Patient Protection and Affordable Care Act”: “Obamacare is a welfare program camouflaged as a reformed health insurance marketplace.”

The Human Services Department predicts that by 2020, 43 percent of New Mexicans will be on Medicaid. But that’s just one part of the larger atrocity of taxpayer-provided healthcare. The U.S. Department of Health and Human Services reports that 53.9 percent of residents here currently have “public health plan coverage.” That is the largest portion among the states, and far higher than our neighbors Utah (23.6 percent), Texas (28.3), Colorado (30.2 percent), Oklahoma (36.5 percent), and Arizona (41.0 percent).

Single payer, here we come!